The proposed acquisition is the largest for IBM since its purchase of PricewaterhouseCoopers in 2002 and is expected to strengthen the company's portfolio of offerings in the managed security services space.

In a statement, Val Rahmani, IBM's general manager of infrastructure management services, said ISS would be a "strategic and valuable" addition to IBM's global services business.

"This acquisition will help IBM provide companies with access to trained experts and leading-edge processes and technology to evaluate and protect against threats and enforce security policies," he said.

With 2005 revenues of $300 million, publicly traded ISS is one of the largest providers of security products and managed security services in the industry. The company sells a range of intrusion prevention, intrusion detection and so-called unified threat management appliances under the Proventia brand name. Among ISS' better-known services is its X-Force Threat Analysis offering that uses a global network of data centers to provide customers with advance intelligence on impending threats and attacks.

ISS claims more than 11,000 worldwide customers including 17 of the largest banks, 11 large public insurance companies and more than a dozen national governments.